SAIC and Engility officials announce merger

RESTON, Va. & CHANTILLY, Va. Science Applications International Corp. (SAIC) and Engility Holdings Inc. officials entered into a definitive agreement under which SAIC will acquire Engility in an all-stock transaction valued at $2.5 billion ($2.25 billion net of the present value of tax assets).

The valuation of the will create one of the largest technology integrators in government services with $6.5 billion of pro-forma in the last 12 months’ revenue, officials say. The transaction will create market sub-segment scale in strategic business areas of national interest, such as defense, federal civilian agencies, intelligence, and space. In addition, it expands the capabilities of both companies, bringing additional systems engineering, mission, and IT capabilities to a broader base of customers.

Under the terms of the merger agreement, stockholders will receive a fixed exchange ratio of 0.450 shares of SAIC common stock for each share of Engility stock in an all-stock transaction. Based on an SAIC per share closing price of $89.86 on September 7, 2018, the transaction is valued at $40.44 per share of Engility common stock or $2.5 billion in the aggregate, including the repayment of $900 million in Engility’s debt.

SAIC has obtained a financing commitment letter from Citigroup Global Markets Inc. for a new seven-year senior secured $1.05 billion term loan facility under our existing credit agreement. The proceeds will be used to repay Engility’s existing debt and associated fees. SAIC expects no immediate change to its quarterly cash dividend as a result of this transaction.

The transaction is expected to close by the end of the fiscal fourth quarter ending February 1, 2019, following customary closing conditions, including regulatory and SAIC and Engility shareholder approvals. The transaction has been unanimously approved by both Boards of Directors. The businesses will continue to operate separately until the transaction closes.

The merger will retain the SAIC name with its headquarters in Reston, Virginia.

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